Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Date Written: August 19, 2014

Abstract

Taller individuals typically have occupations with higher social status and higher earnings than shorter individuals. Further, entrepreneurship is associated with high social status in numerous countries; hence, entrepreneurs might be taller than wage workers. Using data from the German Socio-Economic Panel (2002-2010), we find that a 1 cm increase in an individual’s height raises the probability of being self-employed (the most common proxy for entrepreneurship) versus paid employed by 0.16 percentage-points. Within self-employment the probability of being an employer is increased by 0.11 percentage-points as a result of a 1 cm increase in height whereas this increase is 0.05 percentage-points for an own-account worker. Furthermore, we confirm that a height premium in earnings exists for not only paid employees, as indicated by prior studies, but also for self-employed individuals. An additional 1 cm in height is associated with a 0.44% increase in hourly earnings for paid employees, and a 0.87% increase for self-employed individuals. The predicted earnings differences between short and tall individuals are substantial. Short paid employees — first quartile of height — earn 15.5 Euros per hour whereas tall paid employees — third quartile of height — earn 16.5 Euros per hour; in self-employment the earnings are 12.8 and 14.4 Euros per hour, respectively. Another novel finding is that we establish the existence of a height premium for work and life satisfaction, but only for paid employees. Finally, our analysis reveals that 44% of the height premium in earnings is explained by differences in educational attainment whereas the height premium in work and life satisfaction is only marginally explained by education.

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